WASHINGTON — The banking agencies are resuming their mortgage servicing supervisory and enforcement practices in full for the first time since the onset of the COVID-19 pandemic, regulators said in a joint statement Wednesday.
In April 2020, regulators at the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and the National Credit Union Administration said they would relax certain supervisory requirements for mortgage servicers, many of which said at the time that they were concerned about shortfalls in liquidity.
In particular, regulators said they would not punish servicers for failing to provide borrowers with notices or disclosures within a certain time frame.
But while the pandemic is still affecting mortgage servicers and borrowers, the agencies acknowledged, servicers “have had sufficient time to adjust their operations” in the 18 months since the April 2020 statement was issued. Regulators will no longer honor the temporary flexibility, and will utilize their supervisory and enforcement authorities in full, they said in the statement.
“The agencies recognize the ongoing challenges faced by mortgage servicers and their efforts to assist customers and members affected by the ongoing COVID-19 pandemic,” the new statement said. “The agencies will consider, when appropriate, the specific impact of servicers’ challenges that arise due to the COVID-19 pandemic and take those issues in account when considering any supervisory and enforcement actions.”
The regulators also said they would factor in the time it might take for servicers to make adjustments as a result of the reversal.
In a separate statement, the CFPB said that the restoration of the supervisory and enforcement authorities would help struggling homeowners find alternatives to foreclosure.
“Failures by mortgage servicers and regulators worsened the impact of the economic crisis a decade ago,” CFPB Director Rohit Chopra said in a statement. “Regulators have learned their lesson, and we will be scrutinizing servicers to ensure they are doing all they can to help homeowners and follow the law."
